For The Economic Illiterates Who Read This Blog...

Source: oregon.gov

There was much discussion of labor and wages last week. With our socialist and Cobhamite readers insisting that labor supplies and cost had very little, or nothing to do with wages. I think this document from the Oregon Department of Agriculture makes plain the relationship between labor shortages and wages and proposes a possible solution...

The problem...

Labor compensation in total dollars (or as a percentage of net farm income) is virtually equal to net farm income over the past 15 years, with only one-half of 1 percent difference (0.55 percent) between the amounts-total net farm income was $9.8 billion in accumulated returns, and payment to labor was $9.78 billion. To state this another way, farm employees in aggregate have received virtually equal compensation over the past 15 years as have all farmers, in aggregate, over that same period. The returns or payments aren't evenly distributed among farm types or sizes of operation, and there are slightly more workers than there are farm operations (54,000 compared to 40,000 in 2002, latest Census of Agriculture data).

Labor compensation has increased from 15.8 percent of total farm costs in 1990 to 23.2 percent in 2005. The nursery sector is partially responsible, as its growth has led to an increased number of workers hired with the associated increases in compensation. The indexed minimum wage has also had an effect on compensation, as has an increasingly competitive market for labor (construction, landscaping, food service, hospitality, etc.), and more enforcement of border crossings.

As economic pressure continues to increase for overall employment costs, growers will continue to evaluate cropping options, mechanization and other technologies, and labor availability.

Less workers = higher wages.

It also inexorably, if history is any guide, leads to mechanization...

As noted in the Capital Press photo of the cucumber picker, mechanization is being accelerated due to labor costs and availability concerns. Similar machinery is available or being developed for asparagus, caneberries, wine grapes, and other crops. While fresh market produce—which brings a higher premium than products destined for processing—may retain more hand labor, much of the production will shift to mechanization in coming years as global forces continue to grind away at agriculture’s ability to remain profitable.

I find amusing those "Free Marketers" (i.e. Cobhamites!)(i.e. Free trade lunatics) who insist that it will be the easiest thing in the world, a veritable walk in the park for our notoriously inefficient government to apply an effective guest worker program to milions upon millions of illegal aliens that won't be a gateway for abuse and crime in this country, yet insist that it's simply impossible to create a machine that could pick lettuce!

I would remind these folks that it took from 1714 to 1895 to create a commercially viable typewriter that would allow one to see what was being typed as it was being produced.

And what if our government weren't standing in the way of mechanization? The Center For Immigration Studies reports...

..."progress in harvest mechanization stalled after 1980, both because of the large supply of farmworkers, many of them illegal, and because of an anti-mechanization policy pursued by the federal government since the Carter Administration."

Again with the mechanization -- labor vortex and how its been stymied by an oversupply of illegal labor...

Major progress has been made in the past 40 years in developing mechanical harvesters. The 15-year period 1960-75 was a period of relatively massive mechanization, as growers responded to the labor shortage resulting from the 1964 termination of the Bracero Program (PL 78). However, the average harvesting Lh/ac for all horticultural crops decreased only by 20 percent by 1976 (2). Predictions for a continual gradual increase in the acreage and number of crops harvested mechanically, unfortunately did not materialize (2, 5, 22). Growers were not forced to change because worker supply remained good during the period 1980-95, although many workers were illegal aliens using falsified papers.

Change comes through changing conditions. I have always advocated on this blog for a massive "Manhattan Project" style blitz to kickstart mechanization projects to help wean farmers away from the "serf" model and get them onto a "mechanized" model. And hang onto your hats kiddies cuz I'm about to say something wild and wacky: I would like to see the government spend lavishly to make this so, in fact, let's do an honest accounting of what illegal immigration costs this nation and for five years apply that money to the problem of mechanizing crops.

What are the upsides of the mechanized model?

Decreases illegal immigration, leads to greater efficiency and yields higher profits while decreasing social strains and dependence on foreign national labor of dubious loyalties.

And frankly it is an All-American solution. As I said in comments, what if we could take those 20-60 serf jobs on any given farm and cut the labor requirement to 5 workers? This is not only possible it is likely given what we've seen happen in the past when farmers can mechanize crops. Now instead of having a large number of seasonal employees and the political vicissitudes of bringing labor over the border illegally the grower can make positive capital investments, create a smaller stable staff that is not dependent on jumping a border illegally to get to work and turn those serf jobs into decent blue collar jobs.

Arguments against?

H/T Daniel is Right

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